Tumblr Goes Beyond Banner Ads

Tumblr has been a somewhat silent mover over the past few months, with the intense focus and growth on Pinterest. Yet Tumblr’s traffic and revenue continues to climb as the photo-blogging site proves itself to be a vibrant online community.

Up to this point, Tumblr has monetized its traffic through Adsense and display advertising, or in other words through very traditional measures. While its revenue numbers show promise, the site (much like Pinterest) has yet to find a way to be profitable. That isn’t stopping innovation in monetization strategies though.

Tumblr CEO David Karp sat down with AdAge and talked about his approach to generating more revenue from the site. The topic has been largely avoided by the company; Karp told the Los Angeles Times in 2010 that the thought of advertising “turned their stomachs”. Nevertheless, Karp discussed some of the developments Tumblr has been making in monetization.

One such change came in February with Tumblr’s “Highlighted Posts” feature. Users can pay a small amount of money to highlight one of their posts to users. Karp says that his monetization goal is to allow users to have access to the value that comes with Tumblr’s current 4.5 billion weekly impressions. According to the company, highlighting posts will be just one of several options that users can pick from to promote their content.

In addition, Tumblr has tested allowing users to promote themselves in directories and Karp says that this has been one of the most profitable forms of revenue generation that they’ve seen.

The efforts made by Tumblr are unique and, perhaps oddly, aimed more at individual users than at brands. This is probably the result of Tumblr being built for individuals, not brands, though brands in publishing and fashion have started to come to the platform lately. Tumblr’s move signals that the company will be looking at a number of revenue-models designed for a number of different users.

The current model allows users to highlight a post at just $1. Karp says that it wouldn’t make sense for a user to promote every one of their posts, but for a user who might be a small band promoting a debut, a highlighted promotion is a useful and creative way of reaching their audience.

Whether or not Tumblr becomes profitable through such measures is second to the point that they have the creativity to leverage their site’s strength to provide a positive user experience for both audience and advertiser. That’s something that, with recent privacy issues, larger brands such as Google and Facebook could do well to remember.